Rebating

Believe it or not we have seen a resurgence in situations where multiple buyers are bidding simultaneously on the same home. In these situations buyers need to find a competitive edge when trying to outbid other buyers. There is no more powerful tool in gaining that advantage than "The Rebate".

Here is an example to illustrate the power of The Rebate in these situations:

Home is listed for $275,000 and the seller is offering buyer agents a 3% commission. Buyer X is utilizing the services of an agent that DOES NOT rebate a portion of their commission to the buyer. Buyer Y is utilizing the services of an agent that DOES rebate a portion of their commission to the buyer.

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In the world of homebuying the term "Rebating" refers to the practice of a real estate brokerage firm returning or refunding a portion of its commission from the seller or seller's agent to their buyer client.

For many years the large and dominant real estate brokerage firms with the help of the National Association of Realtors fought for rules prohibiting the practice of Rebating. These firms and NAR were very successful for many years. That was until their actions caught the attention of the Department of Justice Antitrust Division.

In 2005 the Department of Justice announced it had launched an investigation into two rulings by the South Dakota Real Estate Commission prohibiting brokerage firms from Rebating in South Dakota. Shortly after it began its investigation, the Department of Justice announced that the South Dakota Real Estate Commission had rescinded its rulings and that Rebating was now allowed in South Dakota. Thereafter the Department of Justice began investigating bans on Rebating in other states, resulting in several more states lifting their bans on Rebating.

Now that the legal framework is set allowing more competition in the real estate industry, we hope that more firms like ours take advantage of that framework to provide consumers more choice when it comes to buying a home. Thank you.

For more on the Department of Justice's efforts visit their page on Rebating: http://www.justice.gov/atr/public/real_estate/rebates.html

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